How to register a representative office in China - recommendations from World Business Consult

So, you have decided to open a representative office in China. Registration of a representative office in China begins with the preparation of a number of documents:

Company registration certificate - the registration certificate must first be legalized at the diplomatic mission of the PRC in the country where the head office is registered. In some administrative districts of Shanghai there is also a requirement obliging the registering company to have been in operation for more than a year before starting to conduct business in China.

Bank reference letter (Bank Reference Letter) - written on company letterhead with the signature of an authorized person and a seal, this letter should contain a statement about the good reputation of the company and its ability to provide its services in China.

Office lease agreement - note that the premises must be rented before submitting documents for company registration in China. It can only be rented in buildings where leasing to foreigners is permitted, and it should be ensured that the property title certificate specifies that the premises are leased as an office. All documents must be reviewed before submission. In addition, the landlord must provide you with:

proof of ownership of the premises;
the landlord's right to lease the premises;
certificate of registration of the premises with the Property Committee.

It should also be taken into account that for different districts of Shanghai the requirements for documents may vary significantly: how the landlord's details are recorded, requirements for the language in which documents are drawn up, as well as a certificate that the office premises house a representative office of a foreign company.

Documents and information concerning the general (legal) representative of the company in China - a letter of appointment signed by the head office director, the representative's CV, a copy of his/her international passport and a photo.

Application and completed forms - to be filled out in accordance with the requirements of the Trade and Industry Administration, since under Chinese law registration actions can only be performed by licensed consulting companies.

What else should be taken into account when registering a representative office in China

The registration period takes two to three months, however after five days the Trade and Industry Administration issues the registration certificate, with which companies in China can begin their operations.

China imposes the strictest requirements on how documents are filled out and registered, so you should not rely on your own abilities or try to translate the documents yourself. Today there are qualified translators from Chinese to Russian offering their services, which it is advisable to use.

Requirements and obligations of foreign companies in China

Foreign companies in China are obliged to keep meticulous accounting records and pay taxes, the frequency of which depends on the district where documents must be submitted: from monthly to quarterly. As a rule, the tax authority withdraws the required amount from the account of the representative office in China itself.

List of taxes:

business activity tax (5%);
enterprise income tax (2.5%);
personal income tax (on employee salaries).

How to calculate the amount of taxes on business in China?

All representative office expenses are multiplied by an income coefficient of 0.85.

From the resulting amount 5% is deducted as business activity tax and 2.5% as enterprise income tax.

Employee income tax ranges from 5% to 45% proportional to the size of their salary. Filing reports on individual income tax is carried out monthly if the salary does not exceed the non-taxable minimum.

Having weighed all the pros and cons of registering a representative office in China, you need to carefully consider all the existing "pros" and "cons" before making a final decision.